Regulations on heads of representative offices of foreign traders in Vietnam

In the trend of globalization integration along with the development of trade and production technology transfer, Vietnam is gradually becoming an attractive investment destination, attracting a lot of foreign traders. The Representative office of foreign traders is one of the investment forms that help foreign traders conduct trade promotion activities in Vietnam. To maintain the operation of the representative office, a foreign trader shall appoint a person holding the position of the head of the representative office to manage the operation of the office. In this article, Viet An Law provides some legal opinions on the head of a representative office of a foreign trader in Vietnam.

Legal basis

• Commercial Law 2005.
• Decree 07/2016/ND-CP.

Regulations on appointment of head of representative office

Representative offices of foreign traders in Vietnam are affiliated units of foreign traders, established in accordance with Vietnamese law to research the market and carry out a number of trade promotion activities as permitted by Vietnamese law.

Foreign traders appoint the head of the representative office. The head of the representative office must be responsible to the foreign trader for his or her activities and that of the representative office to the extent authorized by the foreign trader.

Responsibilities of the head of a representative office

The person in charge of the head of a representative office has the following responsibilities:

• The head of the representative office must be responsible for his/her activities in case of performing activities outside the scope authorized by the foreign trader.
• The head of the representative office must authorize in writing to another person to perform the rights and obligations of the head of the representative office or branch in accordance with the law when leaving Vietnam. This authorization must be approved by the foreign trader. The head of the representative office or branch is still responsible for the exercise of the authorized rights and obligations.
• In case the above authorization period expires but the head of the representative office has not returned to Vietnam and has no other authorization, the authorized person has the right to continue to perform the rights and obligations of the head of the representative office within the authorized scope. This authorization shall be extended until the head of the representative office returns to work or until the foreign trader appoints another person to be the head of the representative office.
• In case the head of the representative office is not present in Vietnam for more than 30 days without authorizing another person to exercise the rights and obligations of the head of the representative office or is dead, missing, temporarily detained, sentenced to prison, restricted from losing civil act capacity, the foreign trader must appoint another person to be the head of the representative office.

The positions of Head of Representative Office shall not be concurrently held

When appointed as the head of a representative office of a foreign trader, the appointee may not concurrently hold the following positions:

• Head of Branch of the same foreign trader;
• Head of Branch of other foreign trader;
• The legal representative of such foreign trader or other foreign trader;
• The legal representative of an economic organization established in accordance with the laws of Vietnam.

Procedures for appointment of head of representative office

Vietnamese law does not specify the process of appointing the head of a representative office. With practical experience in the process of performing services, Law Viet An would like to propose the appointment process as follows:

Step 1: Selecting the appointee

Foreign traders choose a person who is qualified according to the provisions of the law of the host country, suitable to the business activities of the company to appoint.

Step 2: Issue the appointment decision

The appointment decision shall be signed and stamped by the authorized representative at law of the trader.

Step 3: Notify the Department of Industry and Trade where the representative office is located

The appointment decision upon establishment shall be submitted together with the application file for the establishment of a representative office.

In case of changing the head of a representative office, the change dossier must contain a confirmation that the former head of the representative office has fulfilled its personal income tax obligations and the application must be submitted within 60 days from the date of appointment.

Step 4: Register and declare paying personal income tax

After being granted a license for establishment or change, within 10 days from the date of issuance of the license, the head of the representative office shall contact the tax authority to register and declare personal income tax according to provisions of tax law.

Services of Viet An Law regarding the appointment of the head of a representative office

• Consulting on conditions and criteria for appointment of head of representative office.
• Consulting on appointment procedures, dossiers and notification of appointment to competent state agencies.
• Consulting on responsibilities of the head of the representative office when appointed to the position of representative of traders in Vietnam.
• Consulting, carrying out procedures for registration, declaring to pay personal income tax for the head of the representative office.
• Consulting, carrying out procedures to confirm the completion of tax obligations for the head of the former representative office.